Dan Lee calls it quits; Who let Big Dawg’s out?

Having seen the handwriting on the wall, Dan Lee has sold his Creative Casinos of Louisiana to regional rival Ameristar Casinos for a measly $32.5 million. Bankers were having difficulty computing Lee + Lake Charles = Mojito Pointe. Financing prospects look distinctly better now that Ameristar has taken charge of the project — and Wall Street analysts agree that Pinnacle Entertainment has serious cause to worry about the threat to L’Auberge du Lac that this poses (“a 25% haircut,” one called it). It’s also a humiliating defeat for Lee, who slinks away from the casino industry for the second time in as many years, having failed to raise the capital for his revenge on Pinnacle.

If you accept Carlo Santarelli‘s projection of $98 million in 2915, first-year cash flow at Mojito Pointe, Ameristar got in for dirt cheap: 3X EBITDA. He further projects that the $500 million casino (up from Lee’s $400 million) will gross $221 million in its first year, compared to a forecast of $352 million for L’Auberge. If Ameristar gets a western Massachusetts casino license, it will have $1 billion worth of projects coming on line in three years’ time. That’s quite a difference from the ASCA that rode out the recession by paying down debt, cutting comps and even mulling — then rejecting — putting the company up for sale.

Ameristar’s plans for Mojito Pointe are aggressive indeed. The 25% budget increase represents an upsizing of the hotel from 400 rooms to 700. Covered parking will also be increased 150% (from 400 spaces to 1,000).  Lee’s showroom will be axed, freeing up additional dollars for expansion. Santarelli writes that Ameristar’s entry “effectively dissolves” MGM Resorts International‘s management contract with Lee.

But soft! What player-marketing agreement doth exist between MGM and Ameristar? So MGM’s not out of the Lake Charles market after all and M Life members prospectively have an Ameristar property that would be a real “draw.” However, both companies are jostling for position in Massachusetts, which will test the bonds of their amity. MGM’s balance sheet could give Bay State regulators hives and Ameristar has more skin in the game so far. Unless MGM offers to recoup Ameristar’s New England investment or starts talking “joint venture,” I don’t see that impasse being resolved anytime soon.

Nevada, look to thy laurels! The Silver State could cede bragging rights to being the first state in the Union with Internet poker to … Iowa. Enabling legislation passed the state Senate just shy of 60% support and now goes to the lower house, then to Gov. Terry Branstad (R). This is one of those rare occasions when politicians are pushing the envelope vis-a-vis their constituents, who overwhelmingly oppose ‘Net betting. However, Branstad already tried — and failed — to hike casino taxes in the Hawkeye State, so he might conclude that the state’s Internet “rake” is as close as he’s going to get to that goal.

As though to highlight the stakes involved, cops in Georgia shut down an Internet-casino operation being run across a string of Big Dawg Calling Cards outlets. The bust dramatizes the big bucks ($3 million, in this case) that states are letting slip through their fingers by dawdling over ‘Net-bet legalization. However, the likelier outcome is that Gov. Nathan Deal‘s anti-gambling stance will be stiffened, using the Big Dawg Raid as justification.